UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒** QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
For the quarterly period ended June 30,2026
OR
☐** TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
Commission File Number:001-42889
(Exact Name of Registrant as Specified in its Charter)
| Tennessee | 62-1039469 |
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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| 6710 Cumberland Gap Parkway Harrogate, Tennessee | 37752 |
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| (Address of principal executive offices) | (Zip Code) |
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Registrant’s telephone number, including area code:(423) 869-5151
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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| Common Stock, par value $0.01 per share | CBK | The Nasdaq Stock Market LLC |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
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| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
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| Emerging growth company | ☒ | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐ No☒
As of August 12, 2026, the registrant had 13,701,269.5 shares of common stock, $0.01 par value per share, outstanding.
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| PART I. FINANCIAL INFORMATION | | 2 | |
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| Item 1. | Financial Statements. | | 2 |
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| Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025. | | 2 |
| Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025. | | 3 |
| Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025. | | 4 |
| Consolidated Statements of Changes in Shareholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2026 and 2025. | | 5 |
| Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2026 and 2025. | | 6 |
| Notes to Unaudited Consolidated Financial Statements. | | 8 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | | 39 |
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| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | | 70 |
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| Item 4. | Controls and Procedures. | | 70 |
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| PART II. OTHER INFORMATION | | 71 | |
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| Item 1. | Legal Proceedings. | | 71 |
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| Item 1A. | Risk Factors. | | 71 |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | | 71 |
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| Item 3. | Defaults Upon Senior Securities. | | 72 |
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| Item 4. | Mine Safety Disclosures. | | 72 |
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| Item 5. | Other Information. | | 72 |
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| Item 6. | Exhibits. | | 73 |
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| Signatures. | | 74 | |
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include statements relating to the strategies, future operations, future financial position or performance, future revenue, projected costs, prospects, plans, objectives of management and expected market growth of Commercial Bancgroup, Inc., a Tennessee corporation (the “Parent Company”), and its consolidated subsidiaries (collectively, the “Company,” “we,” “our,” “us,” or similar terms). These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “aim,” “would,” “annualized” and “outlook,” or the negative version of these words or other similar words or phrases of a future or forward-looking nature.
These forward-looking statements are not statements of historical facts and are based on assumptions and estimates that we believe to be reasonable in light of the information available to us at this time. However, these forward-looking statements are subject to significant risks and uncertainties, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date such statements are made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following:
| ● | business and economic conditions nationally, regionally and in our target markets, particularly in Kentucky, North Carolina, and Tennessee and the particular geographic areas in which we operate; |
| ● | the level of, or changes in the level of, interest rates and inflation, including the effects thereof on our earnings and financial condition and the market value of our investment and loan portfolios; |
| ● | the concentration of our loan portfolio in real estate loans and changes in the prices, values and sales volumes of commercial and residential real estate; |
| ● | the concentration of our business within our geographic areas of operation in Kentucky, North Carolina, and Tennessee and neighboring markets; |
| ● | credit and lending risks associated with our commercial real estate (“CRE”), commercial, and construction and land development (“C&D”) loan portfolios; |
| ● | risks associated with our focus on lending to small and mid-sized businesses; |
| ● | our ability to maintain important deposit customer relationships, maintain our reputation or otherwise avoid liquidity risks; |
| ● | changes in demand for our products and services; |
| ● | the failure of assumptions and estimates underlying the establishment of allowances for possible credit losses and other asset impairments, valuations of assets and liabilities, and other calculations; |
| ● | the sufficiency of our capital, including sources of such capital and the extent to which capital may be used or required; |
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| ● | our inability to maintain a “satisfactory” rating under the Community Reinvestment Act; |
| ● | risks that our cost of funding could increase in the event we are unable to continue to attract stable, low-cost deposits or maintain or reduce our cost of deposits; |
| ● | our inability to raise necessary capital to fund our growth strategy and operations or to meet increased required minimum regulatory capital levels; |
| ● | our ability to execute and prudently manage our growth and execute on our business strategy, including expansionary activities; |
| ● | the composition of and changes in our management team and our ability to attract, incentivize and retain key personnel; |
| ● | the effects of competition from a wide variety of local, regional, national and other providers of financial, investment, trust and other wealth management services and insurance services, including the disruption effects of financial technology and other competitors who are not subject to the same regulations as the Company; |
| ● | the deterioration of our asset quality or the value of collateral securing loans; |
| ● | changes in our accounting standards; |
| ● | the effectiveness of our risk management framework, including internal controls; |
| ● | severe weather, natural disasters, pandemics, epidemics, acts of war, terrorism, or other external events, such as the transition risk associated with climate change, and other matters beyond our control; |
| ● | changes in technology or products or services that may be more difficult or costly, or less effective, than anticipated; |
| ● | the risks of acquisitions and other expansionary activities, including without limitation our ability to identify and consummate transactions with potential future acquisition candidates, the time and costs associated with pursuing such transactions, our ability to successfully integrate operations as part of such transactions and our ability, and possible failures, to achieve expected gains, revenue growth, expense savings and/or other synergies from such transactions; |
| ● | our ability to maintain our historical rate of growth; |
| ● | failure to keep pace with technological change, including the increasing use of artificial intelligence, or difficulties when implementing new technologies; |
| ● | systems failures or interruptions involving our risk management framework, our information technology and telecommunications systems or third-party service providers; |
| ● | our ability to identify and address unauthorized data access, cyber-crime and other threats to data security and customer privacy; |
| ● | our compliance with governmental and regulatory requirements, including the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and other laws relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with mortgage origination, sale and servicing operations; |
| ● | compliance with the Bank Secrecy Act of 1970, Office of Foreign Assets Control rules and anti-money laundering laws and regulations; |
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| ● | governmental monetary and fiscal policies; |
| ● | changes in laws, rules, or regulations, or interpretations thereof, or policies relating to financial institutions or accounting, tax, trade, monetary or fiscal matters; |
| ● | the ability of our Parent Company to receive dividends from its wholly owned subsidiary bank, Commercial Bank (the “Bank”), and our ability to satisfy our obligations as they become due; |
| ● | the institution and outcome of litigation and other legal proceedings against us or to which we become subject; |
| ● | the limited experience of our management team in managing and operating a public company; |
| ● | the incremental costs of operating as a public company; |
| ● | our ability to meet our obligations as a public company, including our obligations under Section 404 of the Sarbanes-Oxley Act of 2002; and |
| ● | other risks and factors described under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Parent Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 24, 2026 (the “2025 Annual Report”) and in subsequent filings of the Parent Company with the SEC. |
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions or estimates prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements.
Any forward-looking statement speaks only as of the date it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in or implied by any forward-looking statements.
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Commercial Bancgroup, Inc.
Consolidated Financial Statements (Unaudited)
